2020 (10) TMI 1209 - HC - Income Tax

Capital gain computation - adoption of stamp duty value fixed by the DRO (Stamps) - section 50C applicability - Whether the stamp duty value/guideline value as on the date of presentation of the sale document for registration is relevant for the provisions of Section 50C and not the enhanced value determined under the Stamp Duty Laws subsequently? - HELD THAT - Sub Registrar entertained the document for registration, did not accept the value computed at ₹ 400/- per square feet for the purpose of calculating the Stamp duty payable under the Indian Stamp Act on the said deed of conveyance, but determined the value of the property at ₹ 555/- per Square feet. Unfortunately, the Assessing Officer, while reopening the assessment, took note of this figure namely ₹ 555/- per square feet and recomputed the total sale consideration. The recomputation of the total sale consideration based on the higher value fixed by the Sub Registrar is for the purposes of computing Stamp duty is wholly erroneous. - Decided in favour of assessee.

Summary

Issues:
1. Correctness of stamp duty value for levy of capital gains tax
2. Interpretation of Section 50C of the Income Tax Act
3. Relevance of stamp duty value for Section 50C provisions

Analysis:
1. The appellant challenged the correctness of the orders passed by the Income Tax Appellate Tribunal regarding the adoption of stamp duty value for the purpose of capital gains tax. The main issue was whether the stamp duty value fixed by the District Registrar's Office in July 2011 was correct for a property sold in June 2009. The Tribunal overlooked the actual sale consideration received by the assessee and erroneously adopted a higher value determined by the Sub Registrar for stamp duty purposes. The Court found this approach to be incorrect as the actual sale consideration was different from the value used for stamp duty calculation.

2. The interpretation of Section 50C of the Income Tax Act was also in question. The Tribunal failed to consider the scope of sub-section (2) of Section 50C while adopting the value determined by the District Registrar's Office for the property sold in June 2009. The Court emphasized that the stamp duty value at the time of presenting the sale document for registration is relevant for Section 50C provisions, not any enhanced value determined later under Stamp Duty Laws. The Assessing Officer's error in recomputing the total sale consideration based on the higher stamp duty value was deemed erroneous by the Court.

3. The Court highlighted that the Assessing Officer's mistake in recomputing the total sale consideration based on the value fixed by the Sub Registrar for stamp duty calculation was a serious error. The actual sale consideration received by the assessee was different from the value used for stamp duty purposes. Consequently, the Court allowed the Tax Case Appeal, set aside the Tribunal's order, and answered the Substantial Questions of Law in favor of the assessee. No costs were awarded in this judgment.